Billy Timmins (Wicklow, Fine Gael)
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To ask the Minister for Communications, Energy and Natural Resources the position regarding Dalkey Prospect oil rig and the concerns of citizens from County Wicklow on this issue, the position in relation to the Green Party's call on him to hold a public inquiry into plans for the seismic survey and drilling; the position in relation to the Oireachtas committee report calling for the terms for Ireland's shares of revenue from our oil and gas to be radically overhauled; and if he will make a statement on the matter. [43878/12]

Fergus O'Dowd (Louth, Fine Gael)
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Standard Exploration Licence was granted last year over an area of approximately 380 square kilometres in the Kish Bank Basin off the Dublin/Wicklow coast. The licence is held by a consortium comprising Providence Resources Plc and PSE Seven Heads Limited. The award of this exploration licence confers on the holder the exclusive right to search for petroleum in the licensed area, but does not confer a right to produce/extract petroleum. The licence was granted for a six-year period and includes an obligation to drill an exploration well by August 2014. While my Department has not as yet received a detailed application from Providence Resources for approval to drill on the licence, I am aware that environmental and safety concerns have been raised about the proximity of the proposed well to the coast.

I can assure the Deputy that drilling operators are required to comply with best international practice when carrying out drilling operations offshore Ireland and that my Department will only give an approval to drill once it is satisfied that drilling operations can be carried out in a safe manner and without negative social or environmental impact. In this regard, Licence holders are required to engage a competent Independent Well Examiner to verify the safety of all drilling rigs, drilling equipment, pressure containment systems and drilling processes in advance of and during drilling operations. The well examiner has a role for as long as drilling operations continue and is required to verify any changes to drilling plans. Ongoing monitoring by the Independent Well Examiner, my Department’s Advisers and my Department’s technical specialists continues throughout the drilling of a well. In the event that the exploration activity under this licence resulted in a commercial discovery and a petroleum production project, the licensees would require a number of statutory approvals which would include a full public consultation phase.

With regards to the Joint Committee’s report on offshore oil and gas exploration, I am sure the report will make a valuable contribution to the debate on how we should manage our indigenous oil and gas resources for the benefit of the people of Ireland. In relation to taxation, the report recognises there is a balance to be struck between maximising revenue to the State and incentivising companies to invest in exploration in the Irish offshore. The report goes on to recommend that the rate of tax applying to petroleum production in Ireland should be increased to between 40% and 80%, depending on the profitability of the field. It seems that factors such as high oil prices and advances in exploration technology were key considerations influencing this recommendation. However, high oil prices will not make Ireland any more or less attractive as a location for investment, compared to other countries with oil and gas potential.

Ireland’s petroleum potential is largely unproven and this is likely to remain the case until there is a significant increase in the level of exploration activity from the current low level of exploration drilling. At this point, I remain to be convinced how doubling the maximum tax rate would help attract much needed exploration investment to Ireland but I have committed to engaging with the Oireachtas Committee on Transport and Communications on the Report prepared by the committee.